Exam 4: Time Value of Money 1: Analyzing Single Cash Flows

A deposit of $500 earns 5 percent the first year,6 percent the second year,and 7 percent the third year.What would be the third year future value?

A $5,000 investment has doubled to $10,000 in ten years.How much longer will it take for the investment to reach $15,000 if it continues to earn the same rate?

What is the value in year 3 of a $500 cash flow made in year 5 when interest rates are 6 percent?

Compute the present value of $4,000 paid in five years using the following discount rates: 10 percent in year 1,2 percent in year 2,12 percent in year 3,and 9 percent in years 4 and 5.

What is the value in year 6 of a $900 cash flow made in year 4 when the interest rates are 8 percent?

You are considering an investment that is expected to pay 3 percent in year 1,5 percent in years 2 and 3 and 7 percent in year 4.If you invest $1,000 today,what will this investment be worth at the end of the fourth year?

You deposit $10,000 in an account that doubles in "6" years.How many years will it take the account to be reduced to its original value if it loses 10 percent per year?

Which of the following investments would you prefer?

What annual rate of return is earned on a $900 investment when it grows to $2,500 in 15 years?

When your investment compounds,your money will grow in a(n)________ fashion.

The Rule of 72 is a simple mathematical approximation for

Suppose a U.S.Treasury bond promises to pay $9,780.13 in three years.If bonds of this type are generating a 4 percent annual return,how much would you pay for this bond today?

Approximately how many years does it take to double a $300 investment when interest rates are 8 percent per year?

What annual rate of return is earned on a $5,000 investment when it grows to $7,000 in six years?

Which of the following would you prefer?

Determine the interest rate earned on a $200 deposit when $208 is paid back in one year.

You are offered a choice between $770 today and $815 one year from today.Assume that interest rates are 4 percent.Which do you prefer?

A firm's net income last year was $1.5 million.Its net income grew 5 percent during the last "5" years.If that growth rate continues,how long will it take for the firm's net income to double?

What is the present value of a $500 payment in one year when the discount rate is 5 percent?

Approximately what interest rate is needed to double an investment over six years?